Navient was accused of predatory lending practices such as steering those struggling with their debts into higher-cost repayment plans.
The U.S. Consumer Finance Protection Bureau has filed a proposed order to permanently ban Navient from directly servicing federal student loans, which the agency says will put an end “years of abuse.”
Under terms of the Thursday order, which Navient agreed to without admitting any wrongdoing, the Virginia-based financial services company would also have to pay a $20 million penalty and provide another $100 million in relief to impacted borrowers.
“Today, we are closing the book on Navient,” CFPB Director Rohit Chopra said in prepared remarks Thursday, stating that the company harmed millions of borrowers as “one of the worst offenders in the student loan servicing industry.”
Chopra said the CFPB began investigating Navient, which split off from consumer banking corporation Sallie Mae in 2014, nearly a decade ago. The agency later sued Navient, accusing the company of predatory lending practices such as steering those struggling with their debts into higher-cost repayment plans, or long-term forbearance, and failing to properly process payments.
In the years that followed, states also began to examine such allegations of forbearance steering — leading to debt cancelations for many borrowers across the country.
